Category Archives: Loan

Interesting facts about loans

Approval of loan

Whether it is to acquire any asset or consolidate the debts, loans are one of the best ways to do it. Even though you are coming under a financial responsibility, it is more like an opportunity that we need to capitalize on.

It is important that one should know about loans as there are good possibilities that they might need it at some point in their lives. In this article, we will see some of the interesting facts about loans.

You can have a fixed interest rate

When it comes to personal loans, you can have a fixed personal rate. If there is a fixed personal rate, two things are very much evident. You have a clear picture of the amount that you need to pay, and you will also know the exact time when the loan will be paid off completely. These are the reasons why people are very much interested in taking personal loans. When it comes to credit cars, the banks might offer a fixed rate for some time for promotional purposes. But it will eventually change depending on the credit card management.

Debt

Loans can be either secured or unsecured

The general belief that people have is that they have all the loans need collateral. There are loans that need collateral, and there are ones that do not need collateral. They can be both secured and unsecured. Unsecured loans are very hard to get as there are a lot of risks involved in it. In most of the banks the unsecured loans do not have pre closures and also have high-interest rates. Hence even if there is an improvement in the financial situation, there is no possibility for you to close the loans earlier by increasing your monthly payments.

Business loans are the hardest

Business is without a doubt is one of the hardest loans to get. There are a lot of procedures involved in it. The banks will ask for all kinds of information like the business plan, financial report, criminal history, insurance information and a lot of other things. The bitter truth is that the possibility of getting a business loan from a bank is very hard. Even though you fulfill all the criteria, there are good chances that your loan will be rejected because the banks will not be impressed by your business plan.

Increasing of rate

Credit score increase

There is no doubt about the fact that it is a bad thing to have a poor credit score. But it is something that you need not worry because there are ways in which it can be improved. If you are having a bad credit score, the officials in the banks will let you know the procedures to improve the credit score. All you need to do is just follow their lead, and in a span of six months to one year you can have a good credit score will help you to get your loans easily approved.

 

Questions that a bank will ask if you are applying for a business loan

Bank

It is just two simple words “business loans.” But the things that you need to go through to get these loans from banks is something that cannot be described in worlds. Of all the loans that the bank offers, business loans are the ones that are very hard to get.

One has to pass a lot of hurdles to get the loans approved, and it is not an easy task. There are a lot of things that the banks will ask when you are applying for a business loan. In this article, we will see them in detail.

Collateral

The first and the most important thing that the banks will ask for is the collateral. It is because there are good possibilities that the business is of a huge amount. Hence it is important for the banks to have solid and reliable collateral.

Collateral

Business plan

You might be new to the business. But you need to understand the fact that they have been there for many years. By seeing the business plan, they can judge up to a certain level about the success of the business. If they are impressed by the business plan, there are good possibilities that the loan will be approved.

The finance details

It is mandatory that you need to provide all the present and past financial details. If you have any debts or bad payment history, it is very difficult for you to get the loan. The financial details include bank account statements and credit card bill statements.

Insurance information

The banks while lending the loans they look for all possible ways to reduce the risk. If at all you do not have any insurance, the banks will insist you take life insurance in case of some unfortunate events. The nominee for the insurance that you will be taking is the banks. So if you die the insurance amount will come to the bank.

Insurance

Personal details

You will have to provide the bank with the complete personal details with all the proofs. The personal details include address proof, identity proof with an attestation. There are also a few banks that you ask you for criminal history. It is mandatory that you have a clean past. Or else there is no way that your loans will get approved.

Agreements on future ratios

The majority of the commercial loans include a special thing called the loan covenant. So the loan covenant means the company agrees to have some key ratios. They are quick ratios, current ratios, and debt to equity. For example, if there is a situation in the future where your financials come below a certain level, then it will be considered as a default of the loan. There are good possibilities that it might confuse you. It is because this loan covenants is a huge thing and will take a lot to understand it properly.